Wal Mart's Giant Sucking Sound

Business Week ^ | 10/7/05 | Business Week

[voletti]

That's what one hears as the giant retailer sops up the vitality from middle-class families, local communities, and the national economy . This happens in three different but related ways. First, there's the clobbering of Main Street: Wal-Mart moves in on the edges of towns, and the much smaller downtown merchants, unable to match its prices, soon go under. Second, there's the miserable wage and benefits package offered by Sam Walton's creation. And third, there's Wal-Mart's purchasing strategy, which seems to be about buying American-made products only as a last resort -- to the point that today Wal-Mart, by itself, is China's eighth-largest trading partner!

You could make the case that we are well on our way to becoming "Wal-Mart Nation." But maybe we don't have to be. Consider Costco (COST ), Wal-Mart's most notable competitor –- whose much more sensitive and noble business model actually serves as a boost to the national economy and to its shareholders.

Costco's pay scale begins at around $10 per hour and averages $16. After four years, a Costco cashier can earn $44,000 (counting bonuses), which is significant purchasing power. In comparison, Wal-Mart's average hourly wage is a miserly $9.68. To appreciate the impact of this 65% difference in average wages, University of California at Berkeley researchers recently concluded that in 2003 Wal-Mart's low wages and benefits for its employees in California compelled taxpayers there to give these employees $86 million in food stamps, health-care, and housing subsidies just to stay above water.

[azcap]

Somehow the economist in me tells me I am not getting the best deal at a store where the guy scanning bar codes and putting marshmallows in a sack is getting $44k.

[bkepley]

Downtown = parking meters and traffic tickets. They can't do a whole lot right in town but they're all over an expired meter.

[txroadkill]

Don't know about Target and Costco, but Hillary used to be on the board at Wal-Mart.

[paudio]

Costco pays more and offers better benefits to it's employees. The result is lower turn over, less employee theft and greater employee loyalty. Those savings offset the race to the bottom model Wal-Mart uses. As a result, prices are roughly the same between the two.

Why are we comparing Wal-mart with Costco, anyway? The comparable stores would be Costco and Sam's Club.

[markoman]

It's the horse and buggy argument.
If it wasn't for the automobile,the horse and buggy business's
would still be in operation.

[benjaminjjones]

Vote with your dollar, just don't buy from there if you don't like them.

I don't.

[Prime Choice]

Another whinefest about capitalism. How quaint.

Will someone please tell today's Leftists that socialism failed with Soviet Russia. They can stop dreaming that it's going to succeed anywhere else.

[paulat]

I would die for a good bookstore. There used to be one in the mall, but now even that is gone, as the major bookstores put up their own buildings. I have to travel 15 miles to get to a bookstore.

Why would you need to? I order all my books to be delivered to my local library branch online. If there is something else I need...amazon.com, erc., are more than enough.

[crazyhorse691]

Article is so wrong on so many levels. The loss of the mom and pop store was going on when I was a kid and the kMarts were going up. And it totally ignores the reality that people shop at the WalMarts just as they do at all the other chain stores. Ignore the article as it is just more progressive anti-capitalistic ranting. Actually, that's the part I have trouble getting by so maybe there are some salient facts there.

[doc30]

Sam's Club is a division of Wal Mart. Same company, differnt store name.

[Prime Choice]

What is the whole purpose of this articel ? Walmart- bad Costco - good?

Yup...considering that Costco is run by a turbo-Left Kerry-supporting Kool-Aid drinker.

[Seeking the truth]

Wal-Mart isn't all that dominant on the retail scene

You're making some kind of joke, right?

[satchmodog9]

I found that funny as well. I don't think any local store is offering 401k, profit sharing or insurance.

[Prime Choice]

Sam's Club is a division of Wal Mart. Same company, differnt store name.

And not the same store. Sam's Club and Costco are geared toward totally different markets and located in totally different venues than Wal-Mart.

[Doctor Stochastic]

The author of that article is ignorant about business and economics. Everything he wrote is absolutely wrong.

I've found this to be true of Busines Week in general for at least 30 years.

[aquila48]

I stopped reading "Business Weak" a few years ago (together with the local daily rag) when it suddenly dawned on me that it had morphed into a socialist, anticapitalist mouthpiece.

That realization really blew my mind - how can a business mag be anticapitalism? The whole thing was oxymoronic.

What's a good business magazine nowdays? Forbes, Fortune? I know the Economist is just as lefty.

[azcap]

Why are we comparing Wal-mart with Costco, anyway? The comparable stores would be Costco and Sam's Club.

 

Exactly right! It is intellectually dishonest to say that Costco's sales per store are higher than Wal-Mart's when you are comparing a warehouse store to a 25 year old small town Wal-Mart stores in Podunk rural markets that Costco would never consider entering.

 

[Prime Choice]

Why would you need to? I order all my books to be delivered to my local library branch online. If there is something else I need...amazon.com, erc., are more than enough.

Yeah, but you can't pick up hot geek chicks when you're on Amazon.com... ;o)

[StuLongIsland]

Got to wonder what type of return a store paying so much is giving their stockholders, I have not researched but I think stores are in biz to please the stockholders/owners at the very end.

[Doctor Stochastic]

And I haven't been able to spell for the last 50 years either.